Judge approves Sun Country's flight plan

After two years of troubles, Sun Country Airlines on Friday won bankruptcy court approval of its reorganization plan and said the company is making a profit, plans to acquire more airplanes, add 100 employees and launch new routes.

Under the plan approved by U.S. Bankruptcy Judge Robert Kressel, the Mendota Heights-based airline discharged more than $100 million in obligations and expects to emerge from bankruptcy shortly. The company now is valued at about $20 million, Chief Executive Stan Gadek said.

Whitebox Advisors, a Minneapolis hedge fund that helped Tom Petters purchase the airline in 2006 and had $27 million in claims, opposed the plan. The fund wanted a bigger stake in the reorganized company, attorneys involved said. Whitebox did not return calls seeking comment.

The plan gives a court-appointed receiver about 75 percent of the stock, and it sets the stage for an eventual sale of Sun Country to a new owner. Once that happens, some of the proceeds will partly repay investors burned in a $3.6 billion Ponzi scheme that sent Petters to prison for 50 years.

Sun Country filed for Chapter 11 in October 2008, shortly after Petters' headquarters was raided by federal agents. At the time, Sun Country was expecting a cash infusion from Petters; when that fell through, Gadek sought reorganization in bankruptcy.

Receiver Doug Kelley said Friday that the airline is on the market.

Gadek, who worked for a time without pay, emerged as a small stockholder in the airline, opting to take shares in return for $300,000 he was owed. In an interview Friday, he was upbeat about the airline's future.

He said Sun Country earned $8.2 million in the first half and expects to be profitable for the full year. The airline's 10 weeks of flights to London this summer proved successful -- some had every seat filled -- and will resume next year, he said.

The airline also plans to lease three more Boeing 737-800s, bringing its full-time fleet to 12, and add 100 jobs, including pilots and flight attendants, he said. Sun Country will launch new routes from Lansing, Mich., to Mexico, Florida and the Caribbean, along with the usual additional winter routes from Minneapolis-St.Paul to those vacation spots, he said.

Sun Country flies to 13 cities, including New York, Boston, Washington, Anchorage, San Francisco, Orlando, Phoenix and Cancun.

Kelley said Gadek "brought Sun Country through a perilous time. I really think he has streamlined it. He has positioned the company well. People should be happy with his leadership."

For a time after the bankruptcy, workers took a 40 percent pay cut and the company temporarily borrowed $5 million from the receivership to stay alive, but it eventually repaid the money.